In my previous blog, I spoke about the importance of acquiring Financial Intelligence and the different kinds of money problems that we are challenged with. In case you’ve missed it, you can Read it here.
As a Chartered Accountant, it is my passion to educate people on this subject. In part 2 of this blog series I would like to share some further insights with you as I believe that having the right financial education today is more important than ever. Many of the following principles are derived from Financial IQ guru Robert Kiyosaki and I give credit to him for this.
The Big Question - What is Financial Intelligence?
In simple terms, Financial Intelligence is that part of your total intelligence you use to solve financial problems.
Some examples of money problems can be:
1. “I don’t earn enough money.”
2. “I’m deeply in debt.”
3. “I can’t afford to buy a home.”
4. “My car is broken. How do I find the money to fix it?”
5. “I have $10 000. What should I invest in?”
6. “My child wants to go to college, but we don’t have the money.”
7. “I don’t have enough money for retirement.”
8. “I can’t afford the medical costs.”
9. “I don’t like my job, but I can’t afford to quit.”
10. “I’m retired and I’m running out of money.”
Financial intelligence solves these and other money problems. Unfortunately, if your financial intelligence is not developed enough to solve these problems, the problems persist. They don’t go away. And if you fail to solve the problem, it might get worse. Like it or not, money does affect lifestyle and quality of life. The freedom of choice that money offers can mean the difference between hitchhiking or taking the bus … or travelling by private jet.
Solving Money Problems Makes You Smarter
Solving money problems makes you smarter – if you solve the problem. If you solve your money problem, your financial intelligence grows. When your financial intelligence grows, you become richer. If you do not solve your money problem, you become poorer, and that problem often grows into more problems. If you want to increase your financial intelligence, you need to become a problem solver. If you don’t solve your money problems you will never be rich.
Many people do not solve their financial problems when they are small. Instead of solving the problem they make it worse by ignoring it or not solving the root of the problem.
For example, when short of money, many people use their credit cards to cover the shortfall. Soon they have credit card bills piling up and creditors on their backs. To solve their problem they take out a home loan to pay off their credit cards. Now they have a loan to pay off and credit cards. To solve this problem they take out new credit cards to pay off the old credit cards. Soon they have maximised their credit and cannot afford to pay their bills, so they decide to declare bankruptcy. The problem with declaring bankruptcy is that the problem is still there.
The root of the problem is a lack of financial intelligence and inability to solve financial problems. If you don’t pull a weed up by the root, and only cut off the top, it will come back quicker and bigger. The same is true for your financial problems.
The point is that financial problems are a solution as well. If you solve the problem, you get smarter and your financial IQ goes up. Once smarter, you can now solve bigger financial problems, and get richer. My aim with this blog series is to help you see
In my next blog, I will be talking about the Cause of poverty and How different classes of people handle their money problems.